Friday, November 16, 2012

Jim Sinclair: All hell is going to break loose...and its name is Currency Induced Cost Push Inflation...

Don’t Let Machines Control Your Emotions
by Jim Sinclair, JS Mineset:
Gold will trade at $3500 and beyond. The US dollar will test USDX .7200 before heading lower.
Whatever is required, be it time or money, the Euro nations will get. The Fed will, via swaps, backstop the euro. QE will go to infinity both here and there.
The Chinese have publicly said when the gold market takes a hit they will be buying.
Calm down. Emotions are being run by machines, HFT and nerds who hide behind their computer. They will not win.
All hell is going to break lose, and its name is Currency Induced Cost Push Inflation...
fiscal cliff, Bush tax cuts
Read More @ JS Mineset

150 Seconds Of "You Can't Handle The European Truth" From Kyle Bass

"A popular revolt will happen" is how Kyle Bass sums up the endgame from kicking the can in Europe. Dismissing the headline-making 'But, Blackrock is buying European bonds', Bass reminds Bloomberg's Stephanie Ruhle that very few ever get the crises correct and that the herd will keep buying things until it blows apart. With massively over-leveraged banks and a Greek dependency, Bass notes that investing in Europe now is like picking up a dime in front of a bulldozer and expects Germany will eventualy leave the Euro (within 3-4 years) as the 'joint-and-several' liabilities will never happen. 150 well-spent seconds to summarise just what is going in Europe, as he concludes with Milton Friedman's quote on Europe: "when they hit a bump in the road, it will tear them apart at the core."

2 Dead, 2 Missing As Another Oil Platform Burning In Gulf Of Mexico

Mere hours after BP settles, the US Coast Guard confirms there is an offshore (shallow water) platform burning in the Gulf of Mexico in the area of West Delta Block 32 (near West Cote Blanche Bay). Local TV says that two people are dead and two people are missing after an explosion at the platform. More to come...
  • UPDATE:Gulf rig fire was result of rig explosion at oil/gas platform "West Delta 32"owned by Black Elk Oil, ac. to Coast Guard

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Anonymous Hacks Greek Finance Ministry, Finds "123456" Is Password For 37% Of All User Accounts

While we have yet to go through the thousands of files that hacker collective Anonymous has just released as a result of its hack of the Greek Finance Ministry, an exploit it described as follows: "We gained full access to the Greek Ministry of Finance. Those funky IBM servers don't look so safe now, do they... We have new guns in our arsenal. A sweet 0day SAP exploit is in our hands and oh boy we're gonna sploit the hell out of it. Respectz to izl the dog for that perl candy," what we find even more amusing, if not surprising, is that of the 136 username accounts Anonymous hacked, the password of precisely 50 of them, or some 37% of all workers, is .... 123456 (full list here).

BTFD...(buy the F--king dips)...Keep Stacking...

Gold & Silver Plunge Deja Deja Deja Vu

Whether it is leveraged AAPL traders forced to sell winning collateral to meet margin calls, correlation-driven algos running stops down and up, or simply the whims of worried custodians managing risk for their clients' holdings; one thing is sure - someone (or more than one) has been a size seller of precious metals in the US-day-session-open to Europe-close period for four days in a row now...

Every Time You See This...BTFD...

And Again, Same Time as Thursday.

by SGT,
Let’s take moment to admire the free and fair trade of the precious metals, unencumbered by paper manipulation! This is what a free market is all about. I’m so glad we live in a country that respects the rule of law. America is home to the shining jewel of financial markets which are the envy of the world. Stand proud Americans! It’s an honor to know that we are home to Wall Street and some of the largest banking houses on planet earth. And we are so fortunate to have the SEC and the CFTC to help safeguard these wonderful markets, always standing vigilant and ensuring that if ever there is any malfeasance in the market, it will swiftly be sought out and corrected, and those responsible, brought to justice. May God continue to bless the greatest country in the world. These United States of America.

Meanwhile In Argentina...

Dear Buenos Aires: we have three words of advice - "hide yo' catamarans" (before Paul Singer comes and collects them all once you default again in what the market now deems is inevitable to occur in the next few weeks). 5Y CDS on Argentina just reverse-Baumgartnered to over 3000bps (49/53% upfront) and short-dated CDS imply a 60% probability of default (assuming a 25% recovery).

Here Is Why The ECB Should Be Freaking Out

Given the deterioration left, right, and center in Europe's core and peripheral economies, some question the sustained 'strength' of EURUSD. An under-the-table peg around 1.27 is the conspiracy chatter but we fall back to a tried-and-true recipe for comprehending what the market is thinking - the central banks are in charge and the EURUSD exchange rate merely reflects (as a main trend) the relationship between those two balance sheets (as monetary policy escalates downwards and they battle each other to 'defend' their own currencies' demise). To wit, given the current ratio of the Fed and ECB balance sheets, we would expect EURUSD to be trading around 1.21. The current EURUSD rate implies a balance-sheet ratio of 1.08x - which therefore means the market expects the ECB to expand its balance sheet by EUR740bn; this just happens to be the sum-total of Spanish sovereign debt (according to Bloomberg - while our estimate is considerably higher). So it seems, the market knows that once the ECB starts, it will not be able to stop and will end up taking the entire Spanish debt load onto its books. Spain can perhaps deal with its existing debt in this way - but this appears to us merely incremental sustainability - and like in the US where the Fed is monetizing all long-dated Gross issuance, so the ECB will have no choice but to do the same with Spain in 2013 and 2014 - Treaty or no Treaty!!.

Quote of the Day

Trader Dan at Trader Dan's Market Views - 10 minutes ago
"Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state an intolerable one." --Thomas Paine 

Rancher/Farmers - Further Casualities in the War Being Waged by the Left

Trader Dan at Trader Dan's Market Views - 11 minutes ago
Take a good, hard look at the following article and note particularly way down in the 10th paragraph: Many Democrats argue the tax promotes equality among classes, Read more: If you will recall that article I wrote last week after the election, I mentioned that the left in this country takes as its motto the rallying cry of the French Revolution, "Liberty, EQUALITY, Fraternity". They will not rest until they have reduced every citizen in this nation to the same level of misery and ... more » 

Dealing With Complexity In A Non-linear World

Eric De Groot at Eric De Groot - 1 hour ago
I realize that understanding can by crushed by weight of complexity, but I know few processes adequately defined by linear reasoning (insert tab A into slot A). Investors and traders even those that follow Jim's approach as a creator of production and true wealth are challenged daily by the complexities of a non-linear world. was created to show the door of possibilities in... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

Don`t Fight Change

Admin at Jim Rogers Blog - 1 hour ago
"People who fight change are fighting inevitability itself." - *in The Ultimate Road Trip* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.* 

Bullish On Southeast Asia

Admin at Marc Faber Blog - 2 hours ago
In this "Squawk Box" excerpt, Marc Faber of the Gloom, Boom & Doom Report, says there is one area of the world that he is optimistic about. * **Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.* 

Retirement 'Perfect Storm' Coming in 2013

Eric De Groot at Eric De Groot - 3 hours ago
Anyone building a short list of the most over-hyped economic buzz words of 2012, might want to consider adding: Fiscal Cliff Balanced Approach Perfect Storm George Clooney's agent has to smelling a sequel with so many perfect storms on the horizon. Headline: Retirement 'Perfect Storm' Coming in 2013 An estimated 7 million Americans will reach the age of 65 by the start of... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The Hostess Liquidation: A Curious Cast Of Characters As The Twinkie Tumbles

Perhaps one of the most interesting aspects of the just announced Hostess liquidation, one that will be largely debated and discussed in the media, or maybe not at all, is the curious cast of characters and the peculiar history of this particular bankruptcy. Some may not be aware that the company's Chapter 11 (or colloquially known as 22) bankruptcy filing this January, which today became a Chapter 7 liquidation, was the second one in the company's recent history, with Hostess, previously Interstate Bakeries, emerging from its previous protracted multi-year bankruptcy in 2009. What is curious is that its emergence had all the drama of a anti-Mitt Romney PAC funded thriller, with a PE firm, in this case Ripplewood holdings, injecting $130 million in order to obtain equity control of Hostess as it was emerging last time. There were also more hedge funds, investment banks, strategic buyers, politicians involved in this particular story than one can shake a deep fried numismatic value Twinkie at. More importantly, however, as America has been habituated following the last season of the reality TV show known as the presidential election, if Private Equity then "bad." Only this time there is a twist: because it wasn't really PE that was the pure evil in the Obama long-term campaign, it was associating PE with Republicans, and thus: with jobs outsourcing. And here comes the Hostess twist: because Tim Collins of Ripplewood, was a prominent Democrat, a position which allowed him to get involved in the first bankruptcy process in the first place, due to his proximity with the Teamsters' long-term heartthrob Dick Gephardt (whose consulting group just happens to also be an equity owner of Hostess). In other words, the traditional republican-cum-PE scapegoating strategy here will be a tough one to pull off since the narrative collapses when considering that it was a Democrat who rescued the firm, only to see it implode in a trainwreck that has resulted in the liquidation of a legendary brand, and 18,500 layoffs.

Hamas Escalates - Air Raid Sirens Over Jerusalem

Markets have come to their senses a little and are selling off as news breaks of a plethora of concerning headlines from Israel:
Not good at all...

There Is No Dollar Sign On Your Piece Of Mind

In a word, this weekend, next week, we are facing what the boys in the South call “chicken fried.” This is the moment when the ingredients lounging in your kitchen get tossed in the frying pan and are cooked up with grease (perhaps Greece) splattering everywhere and some concoction that is decidedly unhealthy for you is tossed upon your plate. A week ago the menu consisted of the Capitol Grill of America’s Fiscal Cliff, the red wine (perhaps whine) of Spain and the seemingly never ending fried in olive oil mess provided by both Athens and Brussels. That would have been enough “Opa” for anyone as plates get smashed and people whirl around on some table like dervishes but now we have a new option on the menu, a special provided by the Great Chef in the sky. We get to throw in the latkes of Israel and the hummus provided by Hamas. Any of these menu selections could provide severe heartburn all by themselves but eaten together; a hospital stay may be required or a plot at the cemetery.

Tumbling October Industrial Production And Capacity Utilization Blamed Solely On Hurricane Sandy

Because not one Wall Street analyst could have possibly factored in the impact of Sandy into their expectations of the month's Industrial Production, which in October declined by -0.4% to 96.6 from 97.0 in the Fed's index, well below consensus expectations of a 0.2% rise, and down from last month's 0.4% increase, it is only logical to blame it all on Sandy. Sure enough, this is what the Fed just did: "Hurricane Sandy, which held down production in the Northeast region at the end of October, is estimated to have reduced the rate of change in total output by nearly 1 percentage point." So let's get this straight: Sandy - which hit on October 29, or with about 94% of the month of October done and impacted New York and New Jersey, not the entire US, is responsible for 250% of the entire October 0.4% drop?  Can we please get back to the "It's all Bush's fault" excuses already. At least those were idiotic and funny. Blaming everything on Sandy is just the former. And yes, capacity utilization for the entire USA which came at 77.8%, the lowest since November 2011, and well below expectations of 78.3%, was obviously crushed by a tropical storm that impacted New York and New Jersey for 3 days in the month. Brilliant.

Pre-Open Equity Ramp As Algos Track War-Ridden Oil Higher

Each day we wake and look to the markets for guidance. Typically that guidance means - which easily-leveragable asset class can be pulled (or pushed) to move the US equity markets (in their algo-correlated manner) in which ever direction we need (up as much as possible obviously since the status quo requires it). Sometimes, it's EURUSD, other times it's PMs; today, it is oil's turn! There has been no real escalation in tensions in Israel in the last hour, no news of significance; and yet WTI has popped 1.5% and in an almost perfectly correlated manner, S&P futures have chugged along to the highs of the day to run those stops before the US day-session open. Efficient Markets... Pin Risk... OPEX...

Risk Ramp On Boehner Banality

Great timing. The ubiquitous post-European close trend-reversal was extended by some 'nothing' comments from Boehner that every media outlet is inferring means everything's fixed and compromise is close.  Boehner says talks with Obama were constructive. Outlined a framework with Obama; Will accept revenue if spending cuts.  It's not - what did we expect him to say?AAPL jumped up to VWAP and S&P 500 futures coincidentally reached overnight highs/stops. Now let's see if anyone really believes...

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